All Forum Posts by: Cj Juan

Hi Everyone,

It seems the thread kind of strayed from the original post a bit. To speak a bit more to that, like most of the others have said, what you can do will really be based on the contract you have with the contractor and whether or not he followed the contract with his extras. There really aren't any laws that would give you rights outside of that, unless the contract you signed wasn't valid for some reason. For instance in CT, a contract has to have very specific things in it in order to valid, like a start date, estimated completion date, fixed price or rates or markup if its time and material based, rights of and process for cancellation, address for notifications, etc. My guess is you may not have much to go on here and even if you do it probably wouldn't be worth pursuing since that process could tie up your property until its settled which would probably end up costing you more than the amount you owe him. 

Moving forward I would suggest you create a detailed scope of work with your contractor, along with a fixed price, specific process for discussing and approving changes to the scope, and process for payments, timelines, etc. Good luck!

@Cj Juan I think trying to inform your clients of the potential extra costs is fine, but I think it would probably be better in the long run for you to be more specific with your costs and keep the unconfirmed extras as more of a discussion in the beginning, and then be specific as to the costs of them as they arrive by addressing them as a fixed price change order. I also find it interesting you take a 40% deposit and then balance upon completion. That seems a bit heavy on the front end, especially if the client is paying for or buying the materials, and leaves you pretty exposed on the back end if they decide they're not happy with your work or final price... The types of schedules and contracts that @J Scott and others have mentioned have become industry standards for a reason. They protect both the client and the contractor and set expectations for both in pretty clear terms. As you grow your business you may find it easier to get work by operating in a more familiar way. But its your business. Good luck!

Welcome to the site @Cj Juan 

 BP is a great resource to learn an network in your area

Ken

Welcome Cj Juan ,
I cohost a Meet up in Lakewood of local BP members. There is sure to be a bunch of rehabbers there who would love to answer any questions you may have. We would love to meet you. Our next meeting is tomorrow the 15th at 7pm. Here is a link for all the details. http://www.meetup.com/PacificNWRealEstate/

If you can't make that one, we have it every 3rd Monday of the month.

Best regards

Kevin Carbon

Cj Juan You can't hit anyone with a large bill until they approve it, half of my COs aren't fixed price, they are T&M based at 15-25% markup, receipts and timesheets need to be approved on that day we do the CO, labor rates are pre-determined. Fair for everyone. Like J Scott , I too don't understand the need for you to write down all those unforeseen events. If I were the client and I don't like your CO price, I would simply hire someone to do that part and when it is done, I'll call you back to come in. Of course, most home owners and some investors don't know or have only bare minimum knowledge of contracting, so any kind of presentation, would probably get a better chance of signing that dotted line.

 If you are only providing an estimate (not a single fixed-price bid), what are you signing with your clients in terms of a contract?

Cj Juan Alternates are for them to see how much they could afford, say if they have a 100k budget, they would structure it like 60k base, alternates 6-15k, then 'allowance' at 10k. then when bids come in, they pick and choose which alternates they could pursue, sometimes there are 5 alternates on a bid that could total 80k but we know they will only pick 3 or so to total 30k in this example.

Cj Juan I don't get it, your client will sign an estimate contract? That's not a valid contract, an estimate is just that, an estimate. You will and your client will have a hard time proving that in litigation. Nobody can tell me my estimates are wrong or right, there is only a degree of inaccuracy, if my estimate for a 50sf bathroom is 100k with $2/sf tile and $200 bathtub, nobody could really prove me wrong, estimates are personal opinion based. Now if I give a client a contract, or price, that is different. My contracts have an amount, not an estimate, now if you want, and i have had several bids where my client will ask for "Alternate bids", then we give it to them, I have had one bid that has 7 "Alternate bids", these alternate bids in short is like "what if" bids, which I think what you are referring to. A sample is like the Department of Parks in CA wants me to build a 10-bed Infirmary building with two ADA restrooms, then they have alternate 1: Construct concrete pathway from road to building, alternate 2: construct asphalt pathway from road to building, alternate 3: construct patio first floor, alternate 4: construct deck patio second floor. They can pick only base bid, only alternate 1 or alternate 2,3,4 or alternate 1,3,4. Now that's a contract. An "allowance" is different, sometimes an "allowance" is used to fast track the process of proceeding small unforseen changes such as rotten subfloor, but, it is still either entered into a CO or T&M.
Maybe this will help you on how you structure your contracts and follow industry standards, in case you run into trouble, you'll find yourself in solid ground.